Wed, Mar 19 2008, 10:13 GMT
by Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from wonderful Hamburg and welcome to Varengold’s Daily FX Report. After yesterday’s disappointing Fed interest rate adjudication of only 75 basis points instead of expected 100 the FX market crashed down abnormally because the market was discounted with the expected 100 basis points. From this point on the market is still very volatile.
Markets review
The EUR/USD posted its biggest one day loss in the last six weeks. It was down 0,6% at 1,5636 and is still pushing further away from its session peak of 1,5832 this morning. The dropdown was released because the market was discounted with an expected Fed interest rate cut of 100 basis points but Fed cut off 75 basis points only. Another reason for this dropdown was that Fannie Mae and Freddie Mac announced that the two US mortgage finance companies have won relief from stringent capital rules. So they can pump about 200 bln USD into the shaky mortgage market.
Bank of Japan (BoJ) is likely to cut interest rates by the end of April due to growing downside risks the companies, a sharp tightening of financial conditions and expectations of further Fed rate cuts. Although the USDJPY is down 0,7% to 99,25 after hitting an even worse low at 98,80 yesterday due to sell outs of Japanese players.
Technical analysis
USD/CAD
Since the beginning of March the USD/CAD developed an upward trend. The one-time pitch of the resistance at 1,0000 let suppose further long potential.
AUD/USD
As mentioned in a previous report the positive trend direction of AUD/USD has changed. The March development let suggest a horizontal trade channel with a support at 0,9150 and a resistance at 0,9500.
| Currency | Support 2 | Support 1 | Pivotpoint | Resistance 1 | Resistance 2 |
| EUR / USD | 1,5541 | 1,5582 | 1,5655 | 1,5696 | 1,5769 |
| USD / JPY | 98,13 | 99,05 | 99,75 | 100,67 | 101,37 |
| GBP / USD | 2,0016 | 2,0046 | 2,0098 | 2,0128 | 2,0180 |
| USD / CHF | 0,9880 | 0,9957 | 1,0004 | 1,0081 | 1,0128 |
| AUD / USD | 0,9252 | 0,9272 | 0,9309 | 0,9329 | 0,9366 |
| CAD / USD | 0,9862 | 0,9893 | 0,9919 | 0,9950 | 0,9976 |
| NZD / USD | 0,8056 | 0,8081 | 0,8118 | 0,8143 | 0,8180 |
| EUR / AUD | 1,6684 | 1,6742 | 1,6815 | 1,6873 | 1,6946 |
| EUR / CAD | 1,5372 | 1,5431 | 1,5530 | 1,5589 | 1,5688 |
| EUR / CHF | 1,5575 | 1,5625 | 1,5661 | 1,5711 | 1,5747 |
| EUR / GBP | 0,7736 | 0,7757 | 0,7793 | 0,7814 | 0,7850 |
| EUR / JPY | 154,14 | 155,18 | 156,10 | 157,14 | 158,06 |
| GBP / CHF | 1,9859 | 2,0002 | 2,0098 | 2,0241 | 2,0337 |
| GBP / JPY | 196,90 | 198,82 | 200,31 | 202,23 | 203,72 |
| Date | Time (GMT) | Economic Indicator | Last |
| 19.03.2008 | 09:30 | GB Average earnings 3mth yy | 3,80 |
| 19.03.2008 | 09:30 | GB ILO unemployment rate | 5,20 |
| 19.03.2008 | 10:00 | EZ Eurostat trade, EUR | -4,2 |
| 19.03.2008 | 10:00 | BG CBI trends – orders | 3,00 |
| 19.03.2008 | 11:00 | US MBA Purchase Index | 368,8 |
| 19.03.2008 | 11:00 | US Mortgage market index | 671,7 |
| 19.03.2008 | 12:30 | CA Wholesale trade mm | -2,9 |
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